Pfizer bets $1.3 billion Esperion can help it

Heart drug's prospects spur $35-a-share deal

December 23, 2003|By BLOOMBERG NEWS

NEW YORK -Pfizer Inc., the world's biggest drug maker, is betting its $1.3 billion purchase of money-losing Esperion Therapeutics Inc. will help it overcome patent expirations and spur future sales.

Pfizer, which already had an option to help develop an Esperion medicine, agreed yesterday to pay Esperion investors $35 a share in cash for the company. Study results suggesting the experimental drug can melt artery-clogging fat deposits - a first in heart treatment - spurred New York-based Pfizer to make an offer, said John LaMattina, Pfizer's chief scientist.

Chief Executive Officer Hank McKinnell is using acquisitions for growth as some of Pfizer's biggest products face competition. Concern about a lack of new drugs to make up for the loss of top sellers helped push Pfizer shares down 23 percent last year.

"Big pharmaceutical companies prefer licensing arrangements, but drugs are rare enough now that if you want one, you pretty much have to write a check for the whole company," said Lloyd Kurtz, an analyst at Harris Bretall Sullivan and Smith LLC, which has about 2 million Pfizer shares.

Esperion's medicine, called ETC-216, may one day be used to prevent heart attacks and reverse heart disease, the leading cause of death in industrialized nations. Esperion, which has no products on the market, is also developing other compounds to treat patients hospitalized for heart attacks and heart disease.

"We're at a cutting edge of science here," said Esperion CEO Roger Newton.

Shares of Pfizer rose 3 cents to $34.30 on the New York Stock Exchange yesterday. Esperion, based in Ann Arbor, Mich., gained $11.83 to $34.53 on the Nasdaq stock market.

McKinnell and his predecessors have acquired competitors to find top-selling new products. Pfizer bought Warner-Lambert Co. to gain the cholesterol-lowering drug Lipitor. This year, it purchased Pharmacia Corp. for $60 billion to get all the revenue from the Celebrex and Bextra painkillers.

The transactions have helped keep Pfizer sales climbing. In the third quarter, revenue rose 56 percent to $12.5 billion, helped by the Pharmacia acquisition. Pfizer's net income dropped 4.9 percent because of costs related to the deal.

Lipitor, the world's best-selling drug, is part of a group of medicines called statins. Eventually, ETC-216 may be used as an initial treatment to strengthen the arteries and statins may be used to keep them healthy long term, researchers have said.

Atherosclerosis, which is estimated to account for more than 75 percent of all deaths from heart attack and stroke, occurs when there is a buildup of cholesterol in the arteries. Such buildups can block the flow of blood throughout the body.

ETC-216, based on a natural compound identified in a small group of long-lived people in a remote village in northern Italy, mimics the effect of "good cholesterol," or high-density lipoproteins. Researchers say HDL probably works by removing cholesterol from the artery wall, where it can rupture and cause heart attacks.

"Roger and his company deserve a lot of credit for going into an area of unprecedented approach, to literally remove cholesterol from arteries," LaMattina said. "In looking at the results, we realized they warranted linking up far more closely and decided to purchase the company."

Esperion was founded in 1998 by a group that includes scientists from Warner-Lambert who developed Lipitor. Buying Esperion also gives Pfizer a stronger presence in biotechnology, an area it hasn't pursued aggressively in the past.

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